The burst of the real estate bubble as a promoter of gentrification in Tokyo and Osaka, 1980–2017
MPRA Paper from University Library of Munich, Germany
Our study shows that land price fluctuations are an important factor affecting suburbanization and gentrification of large cities. During a period of economic ascent, the rise of property prices favors commercial and office land use in central city areas, increasing their daytime population while decreasing the residential population. This shift stems from the fact that, in response to the rising land prices, developers tend to raise the height of buildings, and the land price elasticity of building height is smaller for residential than for commercial buildings. In a downturn period, however, with the decline of land prices and shrinking demand for commercial space, it becomes profitable to shift land from commercial to residential use in central locations; gentrification occurs as an unintended consequence of this shift. We provide support for our hypotheses, by examining the population dynamics in Japan’s largest metropolitan areas before and after a nationwide real estate bubble and its burst.
Keywords: gentrification; real estate bubble; housing development; Japan (search for similar items in EconPapers)
JEL-codes: R2 R23 R3 (search for similar items in EconPapers)
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